Nasdaq CoT speculator bias shifts, Dow in the middle

Dow Technical analysis, overview, strategies, and levels

Little change for the week for the Dow keeping its price near the highs and most of its Weekly technical indicators flashing green, while late last week offering a conformist buy-on-reversal opportunity off of Thursday's 1st Support level. Caterpillar was the outperforming component on Friday (Wells Fargo upgrade to 'overweight') followed by Boeing (positive European aviation regulator comments regarding its 737 Max) and UnitedHealth, with Apple and Goldman in the bottom. In component earnings, Walgreens beat estimates forecasting profit growth next year, and we've got more components this week releasing their figures. Fiscal stimulus hopes have dimmed even if the US Senate is expected to pass a bill on Wednesday that is likely to be rejected by House Democrats, and over the weekend comments from Fed officials in an FT article regarding excessive risk-taking and asset bubbles may have spooked investors.

IG client^* and CoT^** sentiment for Dow

Dow chart with retail and institutional sentiment

Nasdaq Technical analysis, overview, strategies, and levels

A higher finish for the Nasdaq, with a move above last week's Weekly 1st (and 2nd) Resistance levels aiding conformist breakouts initially before the eventual retracement, the price drops occurring in a retraceable fashion and aiding conformist buy-on-reversals off of Thursday's 1st Support level. Amongst its components, pharmaceuticals relatively outperformed with Regeneron, BioMarin, and Alexion near the top in Friday's session, those suffering the biggest losses included semiconductor companies Lam Research and KLA.

IG client^* and CoT^** sentiment for Nasdaq

The big item here is the shift in sentiment for CoT speculators, from what was a previous heavy sell 67% to a now moderate majority long 57% on a massive reduction in Nasdaq-consolidated shorts by 18,371 lots (longs rose by only 204 lots). Retail bias has also shifted for the week to majority long, starting last week at a sell 55% and beginning this week with a slight buy 53% bias.

Nasdaq chart with retail and institutional sentiment

DAX Technical analysis, overview, strategies, and levels

Although the DAX generally recovered on Friday following Thursday's price plummet, the move took its price below its Weekly and Daily Support levels triggering stop losses in the process and aiding contrarian breakout strategies on the initial moves lower. Nearly all its main technical indicators on both the Weekly and Daily are now neutral with a non-trending ADX for both, meaning little is needed at this stage to shift its overview to consolidatory from a heavily stalling bull trend, and further entice traders into making a move opposite any significant price change. The recovery on Friday meant most of its components finished higher, the gains led by Daimler (strong forecast earnings results) and MTU Aero Engines, with only Deutsche Wohnen and Vonovia finishing the session in the red. Tougher restrictions in Europe due to rising coronavirus cases doesn’t help, though with yields edging further into negative territory there’s little in terms of alternatives.

IG client^* and CoT^** sentiment for DAX

A lack of DAX figures from the CoT report means looking at US indices they're majority long Nasdaq, S&P and Russell while in the middle for the Dow.

DAX chart with retail and institutional sentiment

*The percentage of IG client accounts with positions in this market that are currently long or short. Calculated to the nearest 1%, as of today morning 8am for the outer circle. Inner circle is from the previous trading day.
** CoT sentiment taken from the CFTC’s Commitment of Traders report, outer circle is latest report released on Friday with the positions as of last Tuesday, inner circle from the report prior.

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